Business Taxation in Global Economy
Business taxation is at the very heart of business affairs and practice. In recent years it has also caught the media and the public’s attention following revelations that many well-known multinational companies were able to structure their affairs in a way that significantly lowered their global tax liabilities. This led to claims that these companies were paying less than their “fair share” of tax, to parliamentary enquires on the issue and even to public protests outside the retail outlets of some of these companies. At the same time, concerns were raised that the existing system for taxing companies is not suited for a digitalised economy. These and other concerns have led to an unprecedented coordinated international process of reform involving 137 countries. This process, which is still on-going, could lead to the most fundamental reform of the international corporate tax system since its foundations were put in place in the 1920s. But some countries, including France and the UK, sped ahead, introducing new taxes targeting digital giants such as Facebook, Amazon and Google, leading the US to threaten broader retaliation through tax and trade measures. International business taxation is highly politically sensitive.
All this means that there has never been a more exciting time to study business taxation. Not only is it of huge importance in practice, but we are also living in a period of unprecedented public, media and political interest in the topic and unprecedented change. The Covid-19 pandemic has only sharpened the focus on taxation. Countries around the world will either increase existing taxes or introduce new taxes to raise further revenues to repay the eye-watering costs of the crisis. This course will provide you with a solid understanding of how business tax systems work in a domestic and international setting. But it aims to do much more. It looks at black letter tax law but always in the context of the policy behind it. The course will thus set out some of the basic policy choices that are made when designing a business tax system and assess their strengths and weaknesses. In other words, it will critically evaluate the existing system and the different options for reform. It will also take a step back and ask more fundamental questions, including: Does a properly functioning international business tax system require cooperation among countries? Can the international tax system take account of the interests of developing countries? And most fundamentally, should we have a corporation tax at all? To undertake this critical evaluation and to answer these questions we need to combine a rigorous understanding of the law with an understanding of concepts drawn from economics and other disciplines that are essential to good tax policy making. We adopt this dual approach on this course. We will engage with the law as it emerges from statutes, case-law and international treaties, as well as concepts, theory and empirical results from economics and other literatures.